NOVELL, INC. 
By WALTHAM, Mass.,
On a non-GAAP basis, income from operations for the first fiscal quarter
2008 was
For the first fiscal quarter 2008, Novell reported
"We are very pleased with our results this quarter. We delivered product
revenue growth across all business units and continued expense control this
quarter," said
Cash, cash equivalents and short-term investments were
Full details on Novell's reported results, including a reconciliation of the non-GAAP results, are included in the financial schedules that are a part of this release.
Financial Outlook
As a result of our acquisition of PlateSpin and our first fiscal quarter 2008 performance, Novell(R) management issues the following financial guidance:
For the full fiscal year 2008:
-- Net revenue is expected to be between $940 million and $970 million,
exceeding previously stated guidance of between $920 million and
$945 million.
-- Non-GAAP operating margin is expected to be between 7 and 9 percent,
excluding all acquisition -- related intangible asset amortization.
Conference Call Notification and Web Access Detail
A live Webcast of a Novell conference call to discuss the quarter will be
broadcast at
The call will be archived on the Novell Web site approximately two hours
after its conclusion and will remain on the Web site until
A copy of this press release is posted on Novell's Web site at: http://www.novell.com/company/ir/qresults/.
Non-GAAP Financial Measures
We supplement our consolidated unaudited condensed financial statements presented in accordance with GAAP with certain non-GAAP financial measures. These non-GAAP measures include adjusted income (loss) from operations, operating margin, income from continuing operations, net income, income per share from continuing operations and net income per share both of which are based on an adjusted number of diluted weighted average shares. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and enable investors to evaluate our performance in the same way that management does. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine bonuses. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are unusual, that are excluded from analysts' consensus estimates, and/or that arise outside of the ordinary course of business, such as, but not limited to, stock-based compensation expenses, restructuring expenses, asset impairments, litigation judgments and settlements, the write-off of acquired in-process research and development, and gains (losses) on the sale of business operations, long-term investments, and property, plant and equipment.
Legal Notice Regarding Forward-Looking Statements
This press release includes statements that are not historical in nature
and that may be characterized as "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act, including those
related to future financial and operating results, future opportunities, the
benefits and synergies of the company's brands, strategies and acquisitions,
and the growth of the market for Linux Platform Products, Identity and Access
Management, and Systems and Resource Management. You should be aware that
Novell's actual results could differ materially from those contained in the
forward-looking statements, which are based on current expectations of Novell
management and are subject to a number of risks and uncertainties, including,
but not limited to, Novell's completion of announced acquisitions, Novell's
ability to transform its business through the implementation of its strategic
plan, Novell's ability to realize the benefits anticipated from the Microsoft
transaction and other transactions, Novell's ability to realize the benefits
anticipated from its restructuring plan, and the expected charges to be
incurred and payments to be made under the restructuring plan, Novell's
ability to achieve its expense targets, Novell's success in executing its
Linux Platform Products, Identity and Access Management, and Systems and
Resource Management strategies, Novell's ability to take a competitive
position in the Linux Platform Products, Identity and Access Management, and
Systems and Resource Management industries, business conditions and the
general economy, market opportunities, potential new business strategies,
competitive factors, sales and marketing execution, shifts in technologies or
market demand, Novell's ability to integrate acquiredoperations and employees,
and the other factors described in Novell's Annual Report on Form 10-K filed
with the Securities and Exchange Commission on
About Novell
Novell, Inc. (Nasdaq: NOVL) delivers infrastructure software for the Open Enterprise. Novell is a leader in desktop to data center operating systems based on Linux and the software required to secure and manage mixed IT environments. Novell helps customers around the world minimize cost, complexity and risk, allowing them to focus on innovation and growth. For more information, visit http://www.novell.com.
*Linux is a registered trademark of Linus Torvalds. All other third-party trademarks are the property of their respective owners.
Novell, Inc.
Consolidated Unaudited Condensed Statements of Operations
(In thousands, except per share data)
Fiscal Quarter Ended
Jan 31, 2008 Jan 31, 2007
Net revenue:
Software licenses $40,431 $38,553
Maintenance and subscriptions 149,183 134,671
Services (1) 41,312 45,162
Total net revenue 230,926 218,386
Cost of revenue:
Software licenses 3,265 4,227
Maintenance and subscriptions 11,640 11,655
Services 43,634 48,565
Total cost of revenue 58,539 64,447
Gross profit 172,387 153,939
Operating expenses:
Sales and marketing 86,605 90,101
Product development 46,058 46,467
General and administrative 26,876 24,883
Other operating expenses (2) 4,367 13,104
Total operating expenses 163,906 174,555
Income (loss) from operations 8,481 (20,616)
Operating margin % 3.7% -9.4%
Other income, net 17,156 18,033
Income from continuing operations,
before income taxes 25,637 (2,583)
Income tax expense 10,953 9,586
Income (loss) from continuing
operations 14,684 (12,169)
Income (loss) from discontinued
operations, before income taxes 1,285 (10,690)
Income tax benefit on discontinued
operations (836) (2,914)
Income (loss) from discontinued
operations 2,121 (7,776)
Net income (loss) $16,805 $(19,945)
Income (loss) per share:
Continuing operations $0.04 $(0.04)
Net income (loss) $0.05 $(0.06)
Weighted average shares 353,047 345,522
(1) Services includes professional services, technical support and
training services.
(2) See Page 8 of 11 for a detail of other operating expenses.
Reclassifications, none of which affected net income (loss), were made to
prior period amounts in order to conform to the current period's
presentation.
Novell, Inc.
Consolidated Unaudited Condensed Balance Sheets
(In thousands)
Jan 31, 2008 Oct 31, 2007
Assets
Current assets:
Cash and cash equivalents $1,038,621 $1,079,819
Short-term investments 728,788 777,818
Restricted cash 51,495 -
Receivables, net 133,606 208,318
Prepaid expenses 68,742 53,316
Other current assets 32,263 35,065
Total current assets 2,053,515 2,154,336
Property, plant and equipment, net 177,082 180,537
Long-term investments 58,643 37,304
Goodwill 399,581 404,612
Intangible assets, net 32,030 33,572
Deferred income taxes 22,027 14,518
Other assets 28,660 29,515
Total assets $2,771,538 $2,854,394
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $34,247 $45,135
Accrued compensation 71,066 112,794
Other accrued liabilities 94,624 122,850
Income taxes payable 49,633 46,724
Deferred revenue 463,605 494,615
Total current liabilities 713,175 822,118
Deferred income taxes - 884
Long-term deferred revenue 259,537 273,066
Senior convertible debentures 600,000 600,000
Total liabilities 1,572,712 1,696,068
Stockholders' equity 1,198,826 1,158,326
Total liabilities and stockholders'
equity $2,771,538 $2,854,394
Novell, Inc.
Consolidated Unaudited Condensed Statements of Cash Flows
(In thousands)
Fiscal Quarter Ended
Jan 31, 2008 Jan 31, 2007
Cash flows from operating activities
Net income (loss) $16,805 $(19,945)
Adjustments to reconcile net
income (loss) to net cash provided by
operating activities:
Stock-based compensation expense 10,767 6,499
Depreciation and amortization 9,000 11,164
Change in accounts receivable
allowances (363) 773
Utilization of previously reserved
acquired net operating losses 5,002 2,471
Gain on long-term investments - (1,738)
Gain on sale of venture capital funds - (3,591)
(Gain) loss on discontinued
operations, before taxes (1,180) 10,848
Changes in current assets and
liabilities, excluding the effect
of acquisitions and dispositions (66,317) 341,047
Net cash (used in) provided by
operating activities (26,286) 347,528
Cash flows from financing activities
Issuance of common stock, net 2,582 7,385
Excess tax effects from stock-based
compensation 9,680 1,986
Payment of cash dividends on Series
B Preferred Stock - (5)
Net cash provided by financing
activities 12,262 9,366
Cash flows from investing activities
Purchases of property, plant and
equipment (5,859) (4,958)
Short-term investment activity 34,518 132
Long-term investment activity - 1,738
Cash restricted due to litigation (51,495) -
Cash divested as a result of Swiss-
based consulting unit disposition (3,417) -
Proceeds from sale of venture capital
funds - 4,964
Cash paid for acquisition of RedMojo,
net of cash acquired - (9,727)
Other (921) 648
Net cash used in investing
activities (27,174) (7,203)
Increase (decrease) in cash and cash
equivalents (41,198) 349,691
Cash and cash equivalents - beginning
of period 1,079,819 675,787
Cash and cash equivalents - end of
period $1,038,621 $1,025,478
Novell, Inc.
Unaudited Non-GAAP Adjusted Income From Operations
(In thousands, except per share data)
Fiscal Quarter Ended
Jan 31, 2008 Jan 31, 2007
GAAP income (loss) from operations $8,481 $(20,616)
Stock-based compensation expense
adjustments:
Cost of revenue 1,308 1,047
Sales and marketing 3,417 1,860
Product development 3,004 2,151
General and administrative 3,038 1,441
Sub-total 10,767 6,499
Other operating expenses
(income) adjustments:
Restructuring expenses 4,367 7,344
Litigation-related income - (543)
Stock-based compensation
review expenses - 6,303
Sub-total 4,367 13,104
Total operating adjustments 15,134 19,603
Non-GAAP income (loss) from
operations $23,615 $(1,013)
Operating margin % 10.2% -0.5%
Novell, Inc.
Unaudited Non-GAAP Adjusted Net Income
(In thousands, except per share data)
Fiscal Quarter Ended
Jan 31, 2008 Jan 31, 2007
GAAP net income (loss) $16,805 $(19,945)
Operating adjustments (detailed above) 15,134 19,603
Non-operating expenses (income) adjustments:
Gain on sale of venture capital funds - (3,591)
Gain on long-term investments - (1,738)
Sub-total - (5,329)
Total pre-tax adjustments 15,134 14,274
Income tax adjustments (537) 1,106
Income (loss) from discontinued operations,
net of taxes (2,121) 7,776
Total net adjustments 12,476 23,156
Non-GAAP net income and non-GAAP income
from continuing operations $29,281 $3,211
GAAP net income (loss) per share $0.05 $(0.06)
Total adjustments detailed above 0.03 0.07
Non-GAAP net income per share and non-GAAP
income from continuing operations per share $0.08 $0.01
GAAP weighted average shares 353,047 345,522
Assumed dilution from stock option exercises 3,022 4,228
Non-GAAP weighted average shares 356,069 349,750
Revisions were made to prior period amounts in order to conform to the
current period's presentation.
SOURCE Novell, Inc.
